In the U.S., the prevailing sentiment is that the consumer is tapped out. And, even for those that have money, there will continue to be a good deal of frugality.
So, it would seem that theme parks would suffer, right?
Perhaps not. This is the thinking of Stephen Schwarzman, who is the chief of the Blackstone Group (NYSE: BX). Interestingly enough, he's doubling down on theme park investments, according to Reuters.com.
Of course, Blackstone recently scooped up ten theme parks from Anheuser-Busch Inbev for $2.7 billion. With this deal, the firm is now the number two player in the industry, after Walt Disney (NYSE: DIS).
Why the attraction? First, Schwarzman sees an opportunity to bring about more cost efficiencies, which is something Blackstone certainly understands.
At the same time, the thawing of the recession will help. Even if the expansion is slow, there should still be enough growth to generate nice returns for theme parks.
Finally, the valuations are dirt cheap. Keep in mind that in the Anheuser-Busch Inbev transaction, Blackstone picked up some of the best parks in the world: the SeaWorld parks in Orlando, Fla., and San Diego, Calif., as well the Busch Gardens park in Tampa, Fla.
So, it's no wonder that Schwarzman is interested in any theme park that comes up for sale.
Tom Taulli is the author of various books, including The Complete M&A Handbook
Closing Bell: When We All Love the PIIGS (NBG, SQNM, PG, ERTS, KO)
Serious Money: Cheapest Stocks List Shrinks from 26 to 21
Chasing Value: Hasbro Earnings Makes My Point
Reader Comments (Page 1 of 1)
10-19-2009 @ 12:57PM
Beltway Greg said...
Silly boy. Do you really think he wants to buy the parks for the rides? No my friend, for the land on which they sit.
Didn't you ever watch "Caddy Shack?" Rodney Dangerfield's character exclaims that cemeteries and country clubs are two great wastes of prime real estate. I think he would've added theme parks. He's really buying
the land. The other stuff is bound for a park in Yalta or to be sold by the pound for scrap.
10-19-2009 @ 1:01PM
Iridium said...
There used to be a Sea World in Ohio. There isn't one anymore because the cost per person to go there went up to $45 for an adult and $35 for a child. That was in the mid '90s. There used to be an Amusement Park next to Sea World. That too is gone.
International Drive in Orlando used to be a booming tourist mecca. It is a virtual ghost town now. It began to fail long before the current economic collapse.
Things like this foreshadowed the collapse because entertainment spending is the true gauge of the health of the consumer. Vacation travel and theme park admissions have been trending downward for quite some time.
Unless Blackstone decides to drop the cost of admission to all the theme parks it bought by 50% or more they are going to lose out big. These parks were failing. InBev just made out like bandits.
WHEN PEOPLE CAN BARELY AFFORD TO FILL THEIR TANK TO GET THERE AND CAN'T PAY THEIR MORTGAGE. THEY AREN'T GOING TO SPEND OVER $300 IN ADMISSIONS AND FOOD FOR A FAMILY OF FOUR TO TAKE THEIR KIDS TO SEA-WORLD FOR THE DAY!!!